High Rolling Right Past Las Vegas

By KEITH BRADSHER

Published: August 28, 2007

Las Vegas's days as the capital of excess may be numbered.

The $2.4 billion Venetian Macao Resort, scheduled to open here Tuesday, will give Sin City more than a run for its money. The Venetian has more floor space than four Empire State Buildings. The hotel's slot machines, baccarat tables and other games of chance sprawl across a casino more than three times the size of the largest casino in Las Vegas. The 15,000-seat sports arena nearly rivals Madison Square Garden, the convention center has a 6,000-seat banquet hall and the luxury shopping mall has three indoor canals with singing gondoliers; the Venetian in Las Vegas has just one.

But what is most surprising about the 3,000-suite project is that it is merely the first of 14 interconnected hotels being built here by the Las Vegas Sands Corporation. When completed, the complex will include a St. Regis, a Shangri-la, a Raffles, a Conrad, an Intercontinental and a Sheraton, with their own casinos, bars and restaurants. And the project, which will cost $10 billion to $12 billion, is just the largest of a series of giant gambling complexes being constructed here in Macao, on the southwestern lip of the mouth of the Pearl River.

China has already surpassed the United States in the manufacture of everything from steel and cement to DVD players and microwave ovens. Now, China is on its way to establishing itself as the global leader in a service industry: gambling.

Why? Money, naturally. When the Sands Macao, the first American-operated casino here, opened its doors three years ago, first-year profits exceeded the total cost of the project, according to the company and industry analysts. Thanks to a national passion for gambling in mainland China, where it is illegal, Macao surged ahead of Las Vegas last year in total money gambled.

But some experts predict that while the gambling industry here will continue to grow briskly, it may not expand as quickly as new casinos and hotels are set to open, resulting in narrower profit margins for the big American operators coming to Macao and for local companies as well.

''The margin will have to come down,'' particularly for operators of older casinos, said Gavin Ho, a gambling analyst at CLSA, an Asian investment bank. ''I think some of the worse players will be driven out of business.''

Currently, Macao resembles Atlantic City -- attracting mostly residents of nearby cities, who appear less than glamorous. The Venetian represents the territory's biggest bet to transform itself into a Las Vegas-like attraction with customers from all over Asia and across the world.

But will there be enough high-stakes visitors to go around? Macao currently has 4,800 rooms in five-star hotels and another 4,000 in four-star hotels, but the Sands project alone will add 2,500 five-star rooms and 17,500 rooms in four-star hotels, including the four-star Venetian. Wynn Resorts opened a casino and hotel here late last year and MGM Mirage will open a 600-room five-star hotel late this year.

Until Portugal returned Macao to Chinese rule in 1999, the island had a reputation for violence, gangs, prostitution and pawn shops, as much as gambling. With an eye to changing that, Beijing broke the gambling monopoly of Sociedade de Jogos de Macau, controlled by Stanley Ho, a Hong Kong billionaire who owns extensive real estate and other investments in Macao.

But Macao's average gambler is still a day-tripper from Hong Kong or nearby Chinese cities in the Pearl River delta. These visitors are so frugal that they often bring their own food and do not rent hotel rooms. They spend an average of just 1.26 days in the territory -- and even that average is inflated by the many Hong Kong residents who work in Macao Monday through Friday and go home on weekends.

By contrast, the average visitor to Las Vegas spends 3.4 days.

''If you look at Macao, there are no or virtually no nongaming revenues,'' whereas nongambling revenues exceed gambling revenues in Las Vegas, said William P. Weidner, the president and chief operating officer of Las Vegas Sands.

There have been some successes in expanding Macao's offerings. A coming exhibition tennis match at the Venetian arena between Pete Sampras and Roger Federer sold out in less than a day; tickets will soon go on sale for two exhibition games featuring National Basketball Association teams.

The Venetian is offering an initial rate of $140 a night for a 650-square-foot suite and advertising heavily in an attempt to persuade Hong Kong residents that Macao is changing. ''They still perceive Macao as a pure gaming place and as a sin city,'' said Billy Ng, an Asian gambling analyst at JPMorgan. On Wednesday afternoon, Mr. Ho's aging Hotel Lisboa and the nearby Wynn and Sands Macao casinos were all attracting sizable crowds -- though each seemed to have its niche. Younger Chinese men and women seemed to be gravitating to the Sands. At the nearby Wynn, where every suite includes a private massage room, middle-aged Chinese occupied most of the tables, along with a handful of Westerners. At the Hotel Lisboa, older men seemed to predominate, with a sprinkling of gaunt young women in extremely short miniskirts and very high heels.